ISLAMABAD: Technical negotiations are underway between Pakistan and the International Monetary Fund (IMF) to finalize the plan and the essential features of the future budget for 2020-21 following the pandemic after COVID-19, Stay Connecting reported on Saturday. .
Senior officials said the IMF has also linked the resumption of the Extended Fund Program (EFF) with the approval of the next budget for 2020–21, in line with a broader framework in which both sides will agree as a result of technical negotiations in the course.
Technical negotiations are ongoing as part of a virtual meeting with the Washington-based IMF team.
IMF Estimates Pakistan Requires $29bn in External Financing
According to IMF estimates, Pakistan will require gross external financing of $ 29.3 billion in the next budget, compared to $ 25 billion for the outgoing fiscal year 2019-20.
This indicates that Islamabad will have to increase its dependence on external indebtedness to meet its financing needs if the country is still unable to attract in the short term, creating an influx of dollars.
The direction of the future budget must be coordinated with the structural reforms foreseen in the EFF program for an amount of 6 billion dollars.
The IMF agreed with Pakistan to review all the macroeconomic and fiscal frameworks in the situation after COVID-19, therefore, the reactivation of the EFF requires a broader agreement in light of emerging realities.
‘Talks Aimed at Evolving Consensus’
The completion of the second review under the FEP and the issuance of the third tranche in the amount of $ 450 million. The United States will be completed after the approval of the budget by the National Assembly in late June 2020. It has not yet been decided whether to conduct the second and third reviews. Qualified or approved by the Board of the Fund separately.
“Negotiations at the technical level are already underway,” said a senior Finance Department official, explaining that these technical negotiations can only become revision negotiations when the budget is approved by parliament.
The official said that the technical negotiations aimed to reach a consensus on a macroeconomic and fiscal basis, where some figures were quite important.
These include the budget deficit, the primary deficit, the FBR revenue collection target, and top spending leaders, as well as structural reforms related to central bank autonomy.
The IMF has set the FBR tax collection target of Rs 5.101 trillion for the next budget against the revised target of Rs 3.908 trillion for the current fiscal year, indicating that approximately 31% growth is required to achieve the desired goal.